The significant challenges faced by high streets across the UK are well documented. The Chancellor's commitment of £675m of co-funding to create a “Future High Streets Fund” in the recent Budget plus cutting business rates for smaller shops (part of £1.5bn to support local high streets) has been broadly welcomed. However, retailers remain under significant cost pressures.

These may be added to during the Christmas period if you take on temporary staff and then again on 6 April 2019, when contribution rates for auto enrolment pension schemes will increase.

Christmas may bring extra costs..

In another sign of the considerable pressure on retailers, it has been reported that ahead of the Christmas period, retail’s busiest quarter, just 36% of retailers are planning to increase staffing levels. [Source: BRC Retail Employment Monitor Q3 2018].

However, if you are planning to take on temporary staff, you need to factor in auto enrolment as the requirements apply to seasonal workers in the same way as for permanent employees. This will involve assessing temporary staff when running payroll and, if necessary, auto enrolling eligible staff into a defined contribution (DC) pension scheme.

You may be able to mitigate the cost of doing this by postponing the auto enrolment of seasonal staff in line with legal requirements, but staff may still have a right to opt into an auto enrolment-compliant scheme.

Contribution rates are due to increase again on 6 April 2019

The increase affects employees who are members of DC pension schemes. If you operate a DC pension scheme, you should be preparing for the increase by considering:

  • whether contribution rates for your schemes need to change from 6 April 2019, and
  • whether you need to consult and/or agree contractual changes with affected members before the changes take effect.

Phasing in contributions

Auto enrolment requires a minimum employer contribution and a minimum total contribution for DC pension schemes based on a percentage of qualifying earnings (the band of earnings between £6,032 and £46,350 for the 2018/19 tax year). Minimum contribution rates for DC qualifying schemes increased on 6 April 2018 and they will go up again on 6 April 2019. The phasing in of these increases had been pushed back by the Government from 1 October 2017 and 1 October 2018 respectively, to give employers more time to prepare. With the April 2019 changes, the current planned phasing in of increases to contributions will be complete.

This table sets out the increases to the standard minimum contribution rates:

Date of implementation

Employer Minimum Contribution (% of qualifying earnings)

Total Minimum Contribution (% of qualifying earnings)

Until 5 April 2018



6 April 2018 to 5 April 2019



6 April 2019 onwards



Employers may certify their DC pension schemes on alternative bases, which have different minimum contribution requirements. For example, many schemes pension all basic salary from £1 upwards, in which case the current minimum employer contribution is 3% of basic salary, with a total minimum contribution of 6% of basic salary. Under the phasing in of contributions, this will increase to 4% and 9% respectively on 6 April 2019.

In practice the actual percentage increase will be decided by the elements of salary that are pensionable under a given scheme.

The need to act now

If you have employees in a DC pension scheme, you will need to:

  • identify the employees affected by the changes
  • check whether minimum contribution rates are written into the governing provisions of the scheme and, if so, whether that documentation requires amendment
  • consider whether you need to take legal advice on references to contribution rates in employment contracts and whether changes are needed to employment contracts to reflect the change in legislation.

Do you need to consult?

If you intend to increase member contributions to a DC pension scheme, you will have to conduct a 60 day pensions consultation process before implementing the proposed change.

Consultation will generally not be required where affected members have been through a pensions consultation process on the change previously or if their contributions will automatically increase in line with the phasing-in timetable because of how the scheme documentation is drafted.

If you would like more information about how the use of postponement can mitigate pension costs for seasonal staff or need advice more generally in preparing for the increase in auto enrolment contributions in April 2019, please speak to Gavin Ellison.